Employers
Existing employers can login here https://myaccount.taxfreecycle.com/login
Why sign up to Tax Free Cycle?
Running the Tax Free Cycle scheme as part of your benefits package for your employees is a great way of motivating your workforce as well as giving them a means to improve their health and well being as well as you enjoying the benefits of having a happy, healthy group of employees.
One of the best things about our scheme is that it's absolutely free. In fact, you'll save money through reductions in NI contributions.
What is the scheme?
The scheme is set up as a cycle hire scheme, and enables employers to loan their employees the use of a bike and equipment for personal use and to cycle to work. The employee can pay for the hire of the bike and equipment through a gross salary sacrifice, therefore allowing them to save Tax and National Insurance on the hire cost. Typically the loan period is 12 months.
Who owns the bike?
As the scheme is a cycle hire scheme, the employer initially owns the bike and equipment and hires it to the employee. When the hire period (usually 12 months) comes to an end the employer may decide to offer to sell the bike and equipment to the employee. If the employee is charged the fair market value value as stipulated in HMRC’s published guidelines, there would be no taxable benefit to report.
What is the fair market value of the bike?
The Fair Market Value (FMV) is the acceptable disposal value of the bike from the employer to the employee. There are 2 factors which affect this 1) Whether the original value of the bike was above or below £500 and 2) The age of the bike. The table below shows the HMRC’s valuation table
|
Age of cycle |
Acceptable disposal value percentage |
|
|
|
Original price of the cycle less than £500 |
Original price £500+ |
|
1 year |
18% |
25% |
|
18 months |
16% |
21% |
|
2 years |
13% |
17% |
|
3 years |
8% |
12% |
|
4 years |
3% |
7% |
At the end of the Hire period, does the employee have to take ownership of the bike?
No. At the end of the hire period Tax Free Cycle is able to help. We can put into effect any decision taken by the employer regarding disposal of the bike or we can continue to administer the hiring of the bike to the employee for free until the value of the bike has depreciated to a lower amount. During the extended hire period the employee still has 100% access to the bike, and must continue using it to cycle to work.
- There are options available to handle to transfer of ownership internally:
1) Decide on an extended hire period, and offer the opportuinty to purchase when this ends
2) Transfer ownership at no cost which would result in a taxable benefit in kind reportable on a form P11D
Tax Free Cycle do not facilitate these processes, but can provide information on these methods.
What is the benefit for the employer of running the scheme?
The great thing about the scheme is that it saves everyone money! The employee saves the Tax and NI on the hire cost, so depending on their income will save either 32% or 42% (though this will reduce to 10% to 20% on average in the event that the employee eventually purchases the bike).
You will also save money by running the scheme as employers save 13.8% in the Employer National Insurance contributions. Also this is a great way for everyone to save money on travel costs, parking costs. And means you can arrive at work feeling more fresh and awake!
What is involved in administering Tax Free Cycle?
We'll help you set the scheme up and promote it to your employees, providing you with posters, a powerpoint presentation for your HR department to show to your employees, and we're also always at the end of the phone to answer any questions you may have.
For larger companies we'll even host a roadshow style event to promote the scheme, and make sure there is as much awareness and understanding within your organisation.
If you are an HR manager and would like more information on the scheme, please don't hesitate to get in contact with us on info@taxfreecycle.com or 0800 634 5101, We're always happy to pay you a visit to go through the benefits of the scheme and how you can implement it and successfully promote it to your staff.
Sign Up today by following the 'Register your company' link below
